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Because the 10-year employee will be granted additional shares after her initial option grant is fully vested. And in a world where both have the option of leav

Because the 10-year employee will be granted additional shares after her initial option grant is fully vested. And in a world where both have the option of leaving and preserving their option value, the follow-up grant will likely be larger than it is in the status quo, because the company will have to incent B to give an additional 6 years of her life to the startup.

a13n 10y ago
Sure but if you join on day 1 then the refresher grants could be peanuts compared to your initial offer? Why wait 4 years to find out you won't get any more equity instead of baking it into the original offer with a longer vesting period? Longer vesting periods + more equity guarantee that employees get more equity. 4 year vesting lets the board decide what happens.
- acslater00 10y ago
  No one is going to 2.5x their 4 year early grant and vest it over 10.
  - a13n 10y ago
    You could do 1.5x over 8. Employee gets more equity in the long run if they stay and still a great payout if they only stay 4 years. It's similar to what I plan to do for my company.
- encoderer 10y ago
  In this scenario you give those employees a new 4 year refresher grant every single year. Not one at hire and one four years later. You pile them on both as a form of performance based compensation and to prevent the exact situation you describe. In your example the guy who leaves after 4 years of low salary makes a lot less than the guy who gets incremental grants and a growing salary who is a vp at the end making 500k a year.
  - a13n 10y ago
    Seems like your incremental grants would be significantly less than the initial ones joining early on, no? Or is it common that leaders get big refreshers along the way? I would say I'm pretty unfamiliar with early employee refreshes but from what I've heard refreshers are usually small compared to the initial grant.
    - encoderer 10y ago
      Yeah I think if you have somebody who is a classic "first engineering hire" and s/he grows into an engineering leader, each major promotion (to manager, director, vp) brings an opportunity for a rich follow-on, as well as a normal yearly grant. Now if somebody is particularly adept at negotiating and somehow take a full point out in their initial grant, you're probably right that incremental grants won't touch that value. But that is 2-4x what I've internalized as the norm.

a13n 10y ago

Sure but if you join on day 1 then the refresher grants could be peanuts compared to your initial offer? Why wait 4 years to find out you won't get any more equity instead of baking it into the original offer with a longer vesting period? Longer vesting periods + more equity guarantee that employees get more equity. 4 year vesting lets the board decide what happens.

acslater00 10y ago
No one is going to 2.5x their 4 year early grant and vest it over 10.
- a13n 10y ago
  You could do 1.5x over 8. Employee gets more equity in the long run if they stay and still a great payout if they only stay 4 years. It's similar to what I plan to do for my company.
encoderer 10y ago
In this scenario you give those employees a new 4 year refresher grant every single year. Not one at hire and one four years later. You pile them on both as a form of performance based compensation and to prevent the exact situation you describe. In your example the guy who leaves after 4 years of low salary makes a lot less than the guy who gets incremental grants and a growing salary who is a vp at the end making 500k a year.
- a13n 10y ago
  Seems like your incremental grants would be significantly less than the initial ones joining early on, no? Or is it common that leaders get big refreshers along the way? I would say I'm pretty unfamiliar with early employee refreshes but from what I've heard refreshers are usually small compared to the initial grant.
  - encoderer 10y ago
    Yeah I think if you have somebody who is a classic "first engineering hire" and s/he grows into an engineering leader, each major promotion (to manager, director, vp) brings an opportunity for a rich follow-on, as well as a normal yearly grant. Now if somebody is particularly adept at negotiating and somehow take a full point out in their initial grant, you're probably right that incremental grants won't touch that value. But that is 2-4x what I've internalized as the norm.